Customers hold the power as new research shows satisfaction dictates banking business performance

12th Jul 2017

The UK Customer Satisfaction Index (UKCSI), published today by The Institute of Customer Service, reveals that slow customer service could have cost some of Britain’s biggest banks over 9,000 accounts in just three months.

The UKCSI compared banks’ current account gains recorded in the most recent Current Account Switch Service Dashboard with the corresponding UKCSI results. Those with higher levels of customer satisfaction (Nationwide, TSB, Santander, Halifax and NatWest) achieved an average of 20,016 net current account gains. These four organisations accounted for 67% (145,743) of all current account gains in Q3, 2016. In contrast, those with lower satisfaction saw an average net loss of 9,017 accounts.

Institute analysis finds that banks fail to match customer priorities in 23 out of 27 areas measured by the UKCSI.  ‘Ease of getting through’ is ranked as highly important (with a score of 8.5 out of 10), but customers’ actual experience is only 7.8.  They also value ‘on time delivery’ (scoring 8.3 out of 10 for importance), but suggest the reality is different from expectation with a score of 7.8.

However, customers are happier when it comes to finding the information they need or engaging with their bank via webchat or social media.  Both measures score higher for actual experience than for the priority given.

Jo Causon, Chief Executive of The Institute of Customer Service, says: “There are clear signs that banks are improving some aspects of the service they provide and making the sort of inroads that they need to drive up trust and higher levels of customer engagement. However, there is clearly still room for improvement and in a very competitive sector, with new entrants challenging the status quo, this should spur banks into action as a failure to act will only lead to greater customer churn.”

The power of customer satisfaction for driving business performance extends beyond the banking sector. The latest UKCSI report reveals that Aldi is now the highest performing supermarket for customer satisfaction, overtaking M&S and Waitrose, whilst also making the largest gains in sales and market share. The three supermarkets with the lowest customer service levels – Tesco, Asda and Co-op Food – all saw small drops in market share.

Overall, The Institute’s analysis finds food retailers with satisfied customers saw sales growth of 10.7%.  This compares to a rise of just 1.8% for those with satisfaction falling below the UK average.

Additional comparisons of customer satisfaction and share price for 42 major retailers over the past five years finds that in a large proportion of cases, when customer satisfaction increases or decreases, share price follows suit.  Morrisons, for example, saw its UKCSI score fall from July 2014 to January 2016, and witnessed dips in share price during the same period.  Ocado has seen a downward trajectory of share price over the past three years, whilst its customer satisfaction score has fallen 5 points since the beginning of 2015.

Causon adds: “The latest data paints a clear picture for UK plc.  Customers should be at the heart of business strategy and where they are not, organisations risk losing out in the battle for customer retention and recommendation.  We are living in uncertain economic times, but now is the time for organisations to be brave, to drive the customer experience agenda harder, if they want to ensure long-term survival.”

The retail (food and non-food) sectors are the top overall for customer satisfaction, whilst banking is among the most improved. Eight of the top ten organisation are from these industries, including Amazon (at number one), John Lewis, Next, Aldi, Nationwide and M&S Bank. Despite price uncertainty post Brexit, the UKCSI also reveals a growing trend for customers placing an emphasis on service over price: the UKCSI
finds 28% of customers favour excellent service even if it means paying more, whereas only 15% always want the cheapest deal, even it means accepting no frills service.

The UKCSI is the national measure of UK customer satisfaction. It rates customer satisfaction at a national, sector and organisational level across 13 sectors – incorporating the views of 10,000 consumers.  More than 30 different considerations – focusing on areas such as staff professionalism, quality and efficiency, and complaint handling – are factored into the results. It is published twice a year, in January and July. To find out more, and to download the full UKCSI report, visit:www.instituteofcustomerservice.com/ukcsi.

ENDS

Notes to editors
For further information please contact:

Ellie Scott, Rebecca Peck and Bethan Davies
E: [email protected]
T: 0207 010 0831 (Ellie), 020 7010 0877 (Rebecca) or 0207 010 851 (Bethan)

About The Institute of Customer Service
The Institute of Customer Service is the professional body for customer service delivering tangible benefit to organisations and individuals so that our customers can improve their customers’ experience and their own business performance.  The Institute is a membership body with a community of over 500 organisational members - from the private, public and third sectors – and over 3,000 individual memberships.  For more information about The Institute of Customer Service go to www.instituteofcustomerservice.com   

About UKCSI

UKCSI (UK Customer Satisfaction Index) is The Institute of Customer Service’s national measure of customer satisfaction. It provides insights into the state and direction of customer satisfaction at a national level, across 13 key sectors and for individual organisations.  UKCSI was launched by The Institute of Customer Service in 2008. It provides a unique way of measuring the current customer satisfaction of UK customers, as well as trends over time.  The July 2017 UKCSI results included in this report are based on 43,500 survey responses. Each response is a completed online questionnaire relating to the customer experience with a specific organisation.  These responses are provided by over 10,000 individual customers. The respondents are representative of the UK adult population, according to region, age and gender.

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